Being one of the fastest developing countries in the world is accompanied by the demand to focus on various crucial areas for development. Semiconductor is one such area demanding significant attention from policymakers and businesses. History is evident that countries like China obtained their manufacturing prowess due to focus on such raw material industries.
India is marching on the same lines and gradually providing the required efforts for the semiconductor industry. This will help in unleashing the support for the domestic production of electronic devices, vehicles and enhance electricity generation technology. Investors can become part of this growth by investing in semiconductor-related industries.
The stock market can be a favourable avenue for the same. Moreover, investors with a low investment corpus can invest in the penny stocks belonging to this industry. Let us explore some of the best semiconductor penny stocks in India.
Indian semiconductors industry
Electricity is one of the key driving forces for the overall development of any country’s industries. One of the core components for this electricity generation and distribution is semiconductor materials. These bridge the gap between the conductor and insulator, which later helps in transferring the current and generation of the electricity. India has been long dependent on other countries like China for this raw material.
Globally, Taiwan, Korea and China are leading in the production of semiconductor capacity. However, India is also planning to bank on this industry in its aim to become the fifth largest economy. The bullish sentiment on the sector is evident as the government has incentivised nearly $10 billion in projects under the Semicon India Programme. Moreover, the private sector participation is visible with the first ‘Made-in-India’ semiconductor chip, set to launch in 2025 by Micron Technologies. The India’s semiconductor production prospects may sure in the upcoming years:
| Year | Indian semiconductor industry (Amount in US $ billion) |
| 2022 | 26.3 |
| 2023 | 34.3 |
| 2032 | 271.9 |
Along with this global and governmental efforts, some indigenous companies are also positive about this sector. Nearly 19 startups focusing on the semiconductor industry are in the process of adding their prowess to the advancement.
Dive deeper with this blog: Everything you need to know about semiconductor stocks
Top semiconductor penny stocks in India
There are no core semiconductor production-based companies in India. However, here some companies are sourced which have nearest operation in the industry and are priced low as of November 26, 2024. Some of the semiconductor penny stocks in India are as follows:
Surana Telecom and Power Ltd
It is a part of the Surana Group and manufactures petroleum jelly for electric cables. It has a long-term contract with state electricity distribution companies. Its shares are trading at ₹19.8 on November 26, 2024. However, its major focus is on solar and wind power. The company is in the process of becoming almost a debt-free entity. The promoter holding is decreasing in this company, and investors should thoroughly analyse the stock before investing.
RRP Semiconductor Ltd
Established in 1989, the company mainly operates in the digital chips business. The stock of this company is trading at ₹113 as of November 26, 2024. The recurring losses for the company can be a concerning factor for investors, but its stock price trajectory has been on an uptrend in recent months. Moreover, the company is seeking to reduce its debt obligation.
Spel Semiconductors Ltd
It has one of the pioneering assembly and testing facility centres in India and is mainly operating in the semiconductor integrated circuit area. As of November 26, 2024, its stock is trading at ₹151, and investors with low corpus may find it a suitable investment. Its customers are spawned across the United States of America, India and Europe, and earns major revenue from overseas.
Comparative analysis
| Particulars (Amount in ₹ crores) | Surana Telecom and Power Ltd | RRP Semiconductors Ltd | Spel Semiconductors Ltd |
| Revenue | 19.88 | 11.15 | 8.18 |
| Net Profit Margin | 16.72% | (5.26%) | (56.72%) |
| Operating Profit Margin | 49.24% | 28.95% | (16.25%) |
| P/E* (in times) | 26.92 | 43.30 | 0.00 |
| Networth | 139.24 | 11.94 | 24.85 |
*P/E = Price to Earning Ratio
Pros and cons of penny stocks investment
Penny stocks are a feasible investment alternative for investors with a small investment purse. They have low market capitalisation compared to the rest of the stocks in the industry. However, like every coin has two sides, these stocks are also accompanied by their pros and cons:
| Pros | Cons |
| Low investment cost and entry barriers. | They may have high volatility and risk of losing investment. |
| If undervalued, the stocks may earn potential returns in the long term. | May be a part of any stock manipulation and can trap investors in the volatility. |
| Volatility provides multiple entry-exit price points for investors. | These stocks may be prone to market circuits due to their fluctuations. |
Read more on penny stocks: From pennies to fortunes: The journey of multibagger penny stocks
Summary
The semiconductor industry in India is expected to rise with nearly 26% CAGR by 2032, and investors can be part of this growth story by investing in the companies belonging to this sector. Moreover, investors with a small purse can explore some of the top semiconductor penny stocks in India, which may provide them with the desired exposure. However, investing can be a sensitive decision and would require research or expert help.
Also, explore: Best Semiconductor Stocks to Invest in India
FAQ
- What is the future outlook for the Indian semiconductor industry?
The Indian semiconductor industry may see a bright light in the upcoming years majorly due to government support and global attention. It may grow by nearly 26% up to 2032. However, it demands the creation of suitable infrastructure and facilities. Investors can invest in the stocks of such companies to be a part of this growth.
- For what purpose semiconductors are used?
These are mainly the raw materials connecting conductors and insulators. When semiconductor chips are produced domestically, the overall costs for many electronic items are reduced. It further reduces the burden of importing such items from foreign countries.
- Are penny stocks too risky?
Usually, they are perceived to be highly risky avenues due to volatility. However, they are also accompanied by some advantages of diversification and potential returns. Moreover, investors also get different entry-exit prices due to volatility.
- Are there any penny stocks related to the semiconductor industry?
In India, core semiconductor companies are not available in India, and only some penny stocks of the companies related to this industry are available. Stocks of Spel Semiconductors Ltd, Surana Telecom and Power Ltd and RRP Semiconductors Ltd can be some of these options available for investors with similar aspirations.
- Is semiconductors a good investment in India?
Yes, semiconductors can add significant value to the investor’s portfolio and provide the desired diversification. Understanding the core business of such companies and assessing their future viability is crucial. Investors should make informed decisions regarding their investments in semiconductors.
